Parmalat Lawsuits Against Grant Thornton Revived by Court

Feb. 21 (Bloomberg) -- Parmalat SpA’s two lawsuits against
accounting firm Grant Thornton LLP were revived for a second
time by a U.S. appeals court decision reversing a trial court’s
order dismissing the cases.

The U.S. Court of Appeals in New York said U.S. District
Judge Lewis Kaplan should have abstained from ruling on the
cases because of bankruptcy-related proceedings and because he
lacked jurisdiction. The appeals court today said the cases
should be sent to federal court in Illinois so they can be
referred an Illinois state court.

The cases have gone to the federal appeals court and back
to Kaplan before. In January 2011, the appellate judges revived
the suits after Kaplan dismissed them, ruling that he applied
the wrong standard in determining whether he had jurisdiction.

The court told Kaplan to determine whether he was required
by federal law to abstain from taking the cases and to leave the
decisions to the Illinois courts. Kaplan, saying he was applying
a rule set by the New York appeals court, decided in August that
he had authority over the proceedings. He later dismissed both
suits.

Parmalat, a dairy company based in Collecchio, Italy,
collapsed in December 2003 in the country’s largest bankruptcy.
It disclosed more than 14 billion euros ($20.1 billion) of debt,
about eight times the amount reported by its former management.
Parmalat exited bankruptcy and returned to the stock market in
2005.

Illinois Courts

“We are very pleased with the decision, which reaffirms
the decision that we thought at the outset of the case, namely,
that this matter belonged in the Illinois state courts,”
Kathleen M. Sullivan, a partner at law firm Quinn Emanuel
Urquhart & Sullivan LLP who represents Parmalat, said in a
telephone interview.

The two cases were originally filed by Parmalat and its
Parmalat Capital Finance Ltd. unit in Illinois state court in
2004, sent to federal court in Illinois and then to federal
court in Manhattan where Kaplan was overseeing multiple Parmalat
lawsuits. Kaplan first dismissed the suits in 2009 and Parmalat
appealed, resulting in the first ruling by the federal appeals
court.

Enrico Bondi, who was appointed to oversee the Parmalat
bankruptcy, sued Chicago-based Grant Thornton claiming it aided
in the fraud that led to the company’s collapse. Parmalat
Capital also sued the firm.

“The Second Circuit’s decision today is about which court
should resolve the case -- not about how it should ultimately be
resolved,” Michele Mazur, a spokeswoman for Grant Thornton,
said in an e-mail.

She said the firm is “confident” the Illinois courts will
dismiss the case as Kaplan did “after years of exhaustive
discovery.”

Grant Thornton LLP never served as Parmalat’s auditor and
is in no way responsible for Parmalat’s fraud, she said.

The case is In re Parmalat Securities Litigation, 04-cv-1653, U.S. District Court, Southern District of New York
(Manhattan).